ThroughBit Bitcoin withdrawal fees explained

Bitcoin transactions are decentralised in the manner that computers running the bitcoin software across the network verify these transactions without requiring any central/manual authority. These computers are known as miners and they need to be incentivised to verify and include transactions in a block since it is a resource intensive process. Hence, the initiator of a bitcoin transaction includes a certain fee which goes to the bitcoin network in order to process the transaction.

There was a time, around 4 years ago when one could send Bitcoin for practically no fee. This was possible because there were lesser number of people that used Bitcoin and hence, the average number of transactions that were made in a 10 minute window was pretty low. So, when one used the official Bitcoin wallet and chose not to pay any fee, the trasaction would still go through in a few minutes.

And then, Bitcoin chose to become popular.

The exponential growth of Bitcoin users meant that there was an insane number of transactions being made every minute. The only way to ensure that a transaction went through in the next few minutes or in some case the next couple of hours was to include a fee. Like with everything, higher the fee, faster the service. Think of paying higher fees as using ‘Tatkal’ to get your train ticket done.

ThroughBit uses the best in the industry wallet provider, BitGo to handle withdrawal transactions. We process Bitcoin withdrawals every minute. We batch the number of outgoing transactions in a single minute and then send it across to the network in one single transaction.

There are two reasons why we do this-

• This helps in reducing the clutter of the Bitcoin Blockchain by clubbing many transactions together rather than sending each transaction one by one which would occupy more space in the blockchain.
• Clubbing the transactions together also helps in reducing fees (Not all the time since this would also depend on the number of unspents and the size of the transaction)

We recently reduced our fees to as low as 0.00005 BTC which was unthinkable until the protocol SegWit was integrated across various exchanges and wallets. Bitcoin fees have largely reduced all across the network with top wallets such as Coinbase, Bitfinex, BitGo providing support to SegWit addresses. Click here to learn more about SegWit.

However, the fees that is charged on ThroughBit can change depending on the network congestion. Our fee structure is explained in detail on www.throughbit.com/fees